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The conflict that took shape in the 1790s between the Federalists and the Antifederalists exercised a profound impact on American history. The Federalists, led by Alexander Hamilton, who had married into the wealthy Schuyler family, represented the urban mercantile interests of the seaports; the Antifederalists, led by Thomas Jefferson, spoke for the rural and southern interests. The debate between the two concerned the power of the central government versus that of the states, with the Federalists favoring the former and the Antifederalists advocating states rights.
Hamilton sought a strong central government acting in the interests of commerce and industry. He brought to public life a love of efficiency, order and organization. In response to the call of the House of Representatives for a plan for the “adequate support of public credit,” he laid down and supported principles not only of the public economy, but of effective government.
Hamilton pointed out that America must have credit for industrial development, commercial activity and the operations of government. It must also have the complete faith and support of the people. There were many who wished to repudiate the national debt or pay only part of it. Hamilton, however insisted upon full payment and also upon a plan by which the federal government took over the unpaid debts of the states incurred during the Revolution.
Hamilton also devised a Bank of the United States, with the right to establish branches in different parts of the country. He sponsored a national mint, and argued in favor of tariffs, using a version of an “infant industry” argument: that temporary protection of new firms can help foster the development of competitive national industries. These measures — placing the credit of the federal government on a firm foundation and giving it all the revenues it needed — encouraged commerce and industry, and created a solid phalanx of businessmen who stood firmly behind the national government.
Jefferson advocated a decentralized agrarian republic. He recognized the value of a strong central government in foreign relations, but he did not want it strong in other respects. Hamiltons great aim was more efficient organization, whereas Jefferson once said “I am not a friend to a very energetic government.” Hamilton feared anarchy and thought in terms of order; Jefferson feared tyranny and thought in terms of freedom.